PENN. HALTS ROLE IN AGENTS' FINGERPRINT AGENCY

Pennsylvania Insurance Commissioner Diane Koken announced she will stop sending insurance agents' fingerprints to a national repository, just days after a bill backed by the state's independent agents that would have prohibited the state's participation was introduced in the Pennsylvania House's Insurance Committee.

"We commend Commissioner Koken for taking this action," said John Collins, chairman of the Insurance Agents and Brokers of Pennsylvania. "It demonstrates that she understands the importance of protecting producers' privacy rights. Not only is this a matter of protecting our members' rights, but also a matter of guarding against a disturbing precedent."

The fingerprint repository is a pilot project administered by the National Association of Insurance Commissioners. Since May 2005, the state has been sending a copy of the fingerprints submitted by new agent license applicants to a central database housed at the NAIC headquarters in Kansas City.

Pennsylvania was one of only four states sending prints to the repository.

IA&B questioned the purpose of the repository, how producers' privacy was being protected and how the fingerprint records were being secured.

INSURERS MOVE TO LIMIT R.I. LEAD CLEANUP COSTS

Insurers for three former lead paint manufacturers are seeking to limit insurance policies held by the paint companies.

Underwriters at Lloyd's of London filed the lawsuit in New York State Supreme Court last month after a Rhode Island jury decided three former lead paint makers -- Sherwin Williams, Millennium Holdings and NL Industries -- created a public nuisance by selling the now-banned product and should be responsible for cleaning it up.

Rhode Island Superior Court Judge Michael Silverstein is deciding on an abatement and cleanup program, which could cost millions of dollars that the paint companies could try to collect from their insurance.

Jack McConnell, a private attorney who represented the state, called the lawsuit routine.

In the lawsuit, Lloyd's says the former lead paint makers didn't disclose the dangers of lead paint when they purchased their policies.

RMS CEO SEES BIGGER CATASTROPHE LOSSES

Speaking at the World Insurance Forum in Bermuda, Hemant Shah, Risk Management Solutions CEO, warned that insurers should be preparing to increase their reserves for catastrophe losses, not only due to the unprecedented 2005 hurricane season, but also to prepare for a stormy future.

Coinciding with the Conference, RMS said it's ready to release three new catastrophe models which will cover the Gulf of Mexico's windstorm, offshore energy and Caribbean risks, "on the back of lessons learned from last year's hurricane season."

The aim of any cat model is to anticipate what the risks are. Shah would agree with Karen Clark, who heads RMS rival risk modeler AIR, that the industry is facing a problem known in the data processing business under the familiar term "garbage in, garbage out," as he noted: "The model is only as good as the data it contains." In November Clark stated: "Modeled loss estimates are only as accurate as the exposure data input into the catastrophe model."

Katrina and her sisters brought the cat modelers, and those who relied on them, back to reality. Shah said there'd been a change in how models are viewed, while noting that they'd "never been the complete solution."

In an allusion to the assumed practice of simply plugging data into a model and letting it do the work, he cautioned that it's just "one of the tools which the underwriter has at their disposal to make their decisions."

US AIRWAYS CAN'T COLLECT FOR 9/11 DISRUPTION, COURT RULES

US Airways cannot collect insurance for post-9/11 business losses because it already received money for that purpose from the federal government, the Virginia Supreme Court ruled March 3, according to an Associate Press report.

The Tempe, Ariz.-based air carrier received $310 million under a law passed by Congress to stabilize the airline industry after the Sept. 11, 2001, terrorist attacks. The Supreme Court said that amount had to be deducted from US Airways' insurance claim.

PMA Capital Insurance Co.'s maximum liability under its policy with US Airways was $2.5 million. A provision in the policy said any losses would be reduced by all "salvages, recoveries, and payments ... received prior to a loss settlement."

Because the insurance company's potential liability was far less than the amount received from the government, the company owes nothing, the court ruled.

The unanimous decision reversed a ruling by Arlington County Circuit Court Joanne Alper, who had ruled that the federal aid did not meet the legal definition of a "payment."

The high court said the compensation did, however, meet the definition of "recoveries."

The case stemmed largely from losses US Airways suffered because of the Federal Aviation Administration's closure of Reagan National Airport in northern Virginia after one of four hijacked airliners crashed into the Pentagon a few miles away. The shutdown prevented US Airways from flying into or out of Reagan from Sept. 11 to Oct. 4.

US Airways claimed $58 million in losses under its contract with six insurers, but the limit on its policy was $25 million.

PMA underwrote 10 percent of the coverage.